The amendment to the Act, effective January 1, 2024, fundamentally changes the timing of the taxation of specific income, which is the acquisition of options and shares by an employee from his or her employer, the employer’s parent company or a subsidiary.
Until the end of 2023, the income was taxed at the time of acquisition of the share or exercise of the non-transferable option. As of 2024 the following moments trigger the taxation of this type of employment income:
- the employee stops working for the employer;
- the employer enters into liquidation;
- the employer or the employee ceases to be tax resident in the Czech Republic;
- the employee transfers the shares or options;
- the employee exercises the option;
- a share exchange in which the total nominal value of the employee’s shares changes;
- the expiry of 10 years from the date of acquisition of the shares or option.
The amendment to the law will actually affect all employers who use the institution of shares or options in their remuneration schemes. They will need to monitor and assess whether any of the above points have occurred. Employees, on the other hand, will have to inform their employer when they sell shares. As the amendment allows for a fall in market price to be taken into account under certain conditions, changes in market price will also need to be monitored.
For more information contact our team.